President Trump’s Treasury Secretary Steve Mnuchin and Chief Economic Advisor Gary Cohn outlined the administration’s tax reform plan this week. The plan was light on details and left a lot of questions unanswered. The one-page summary was as follows:
2017 Tax Reform for Economic Growth and American Jobs
The Biggest Individual and Business Tax Cut In American History
Goals For Tax Reform
- Grow the economy and create millions of jobs
- Simplify our burdensome tax code
- Provide tax relief to American families – especially middle-income families
- Lower the business tax rate from one of the highest in the world to one of the lowest
Individual Reform
- Tax relief for American families, especially middle-income families:
- Reducing the 7 tax brackets to 3 tax brackets of 10%, 25% and 35%
- Doubling the standard deduction
- Providing tax relief for families with child and dependent care expenses
- Simplification:
- Eliminate targeted tax breaks that mainly benefit the wealthiest taxpayers
- Protect the home ownership and charitable gift tax deductions
- Repeal the Alternative Minimum Tax
- Repeal the death tax
- Repeal the 3.8% Obamacare tax that hits small businesses and investment income
Business Reform
- 15% business tax rate
- Territorial tax system to level the playing field for American companies
- One-time tax on trillions of dollars held overseas
- Eliminate tax breaks for special interests
Process
- Throughout the month of May, the Trump Administration will hold listening sessions with stakeholders to receive their input and will continue working with the House and Senate to develop the details of a plan that provides massive tax relief, creates jobs, and makes America more competitive – and can pass both changers.
The President’s tax outline received a mostly lukewarm reception from Republicans. Conservatives are concerned about adding to the national debt as some analysts have said that the plan could add trillions of dollars in new debt over the next decade. Administration officials claim that the economic growth stimulated by the tax cuts would offset the costs. The administration believes that economic growth would be at 3% or higher, while the Congressional Budget Office projects growth under 2%.
The President’s plan did not include a border adjustment tax proposal supported by House Speaker Paul D. Ryan (R-WI). That tax is estimated to raise $1.2T over 10 years, which could help pay for the lower tax rates in the President’s proposed tax reform.
House and Senate Republicans said that the President’s outline would serve as “critical guideposts” as they pursue tax reform legislation. The White House plans on holding listening sessions with stakeholders on the emerging tax package.
While the President had once considered linking a $1T infrastructure bill to tax reform, there was no mention of infrastructure funding during the rollout this week.